The ruble’s appreciation following the European Central Bank’s interest-rate cuts will be short-lived as Russia’s economy stagnates, HSBC Holdings Plc said, Bloomberg reported on Friday.

The ruble gained the most in three weeks, adding 0.7% to 47.2500 per euro by 18:00 on Thursday in Moscow, when the central bank ends market operations. The advance pared its year-to-date depreciation to 4.4% versus the euro and 5.3% against dollar, the biggest drop among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso.

ECB President Mario Draghi yesterday reduced the deposit rate to minus 0.1% from zero in a bid to spur bank lending and boost the economy, making it the world’s first major central bank to use a negative rate. The ruble advanced along with many other east European assets on bets more capital would flow into higher-yielding and riskier assets.

The ECB “stimulated risk appetite and euro weakening, along with the strengthening of a number of EM currencies, including the ruble,” Alexander Morozov, Moscow-based chief economist for Russia & the Commonwealth of Independent States at HSBC, said by e-mail. “From the fundamental point of view, the ruble looks too strong, thus we expect a resumption of the weakening trend in the next few weeks.”

Russia’s economy will expand 0.2% this year, the slowest pace since a 2009 recession, according to International Monetary Fund forecasts. The central bank increased interest rates by 200 basis points to 7.5% this year to help shore up the ruble amid capital outflows following President Vladimir Putin’s incursion in Ukraine.

Bearish Options

While the increases helped calm financial markets, they also impacted money-market rates and made borrowing more costly for Russian companies, Сentral Bank Deputy Chairman Ksenia Yudaeva said in London yesterday.

The ruble has appreciated 2.9% against the dollar and 4.9% versus euro over the last month as tension surrounding Ukraine declined along with speculation over further U.S. and European Union sanctions against Russia.

The Russian currency has a 67% chance of weakening 3% to the dollar over the next three months, while it has a 39% probability of appreciation by the same scale, according to options data compiled by Bloomberg.

The ECB opened a 400 billion euro or U.S. $542 billion liquidity channel tied to bank lending and officials will start work on an asset-purchase plan.

“The ECB’s actions are positive for all emerging markets,” Dmitry Dorofeev, a money manager at BCS Financial Group in Moscow, said in e-mailed comments. They “will help the ruble as well by increasing its carry appeal compared with European countries, Russia’s main trading partners.”

The ruble was 0.7 stronger versus the regulator’s target dollar-euro basket. Benchmark government bonds due February 2027 rose, pushing down the yield 10 basis points to 8.57%, the lowest since February 28.